Removing Barriers Blog

CFPB Issues Bulletin Addressing Incentive Programs Outside of Rulemaking Process
Posted December 01, 2016 by CUNA Advocacy

Likely in response to the Wells Fargo enforcement action from earlier this fall, the CFPB released a bulletin this week entitled, “Detecting and Preventing Consumer Harm from Production Incentives.” CUNA’s compliance department is reviewing the bulletin and will provide information to credit unions about whether and how it impacts any employee incentive programs they may have. 

On a broader scale, CUNA remains concerned when the CFPB issues such bulletins because there is a lack of clarity about what type of precedent they set. Furthermore, it is concerning to credit unions when the CFPB creates new requirements, even if well intentioned, in circumvention of the Notice and Comment process. 

The bulletin states that, “It compiles guidance the CFPB has already given in other contexts and highlights examples from the CFPB’s supervisory and enforcement experience in which incentives contributed to substantial consumer harm. It also describes compliance management steps that supervised entities should take to mitigate risks posed by incentives.” 

This provides little clarity to credit unions, who are also struggling to determine what precedent is set by enforcement actions. Credit unions have sought clarity on this issue from the CFPB in recent weeks and have been provided minimal guidance about what a CFPB enforcement action means for their specific compliance programs. 

The bulletin further states that, “This Compliance Bulletin is a non-binding general statement of policy articulating considerations relevant to the Bureau’s exercise of its supervisory and enforcement authority. It is therefore exempt from notice and comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 USC 553(b). Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 USC 603(a), 604(a). The Bureau has determined that this Compliance Bulletin does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act, 44 USC 3501, et seq.” 

Credit unions and their member owners certainly support fair practices in any incentive programs. However, we have highlighted concerns with this kind of policymaking in the past that is conducted outside of the rulemaking process and supposedly does not impose new requirements, but can set new precedent at the state level or in class action litigation. 

CUNA has urged the CFPB, in light of the change of Administration, to cease moving forward with any new requirements, particularly if they do not allow public feedback to be considered. CUNA will continue to urge the CFPB to provide more transparency to the public and consumers.